The PayPal vs. Square Battle: Who’s Your Money On?

After PayPal launched a program last week offering free transaction processing for merchants who switch to its point of sale card reader, Square hit back yesterday by announcing it will be offering a P2P payments service via email.

Some in the banking industry may be worried about disintermediation from PayPal or Square, but the two companies seem more intent on battling each other. Last week Square announced the availability of its new iPad point of sale card reader, Square Stand, which is connected to a receipt printer, cash drawer and barcode scanner. On the same day PayPal announced it will start a new program next month called Cash for Registers. PayPal will offer merchants free credit, debit, check and PayPal processing through the end of 2013 if the merchant trades in its old point of sale terminal for a PayPal Here iPad-based card reader, which is similar to Square Stand.

PayPal clearly thinks that the added incentive of free transaction processing should help it lure retailers and merchants interested in mobile point of sale solutions who might be looking at Square.

Then yesterday Square took aim at PayPal’s bread and butter: P2P payments. Square is launching an invitation-only email P2P payments service, dubbed Square Cash, according to media reports. Users will be able to register their debit card with Square and then send money via email by entering the recipients name in the “to” field and entering “pay@square.com” in the “cc” field. The sender will have to pay 50 cents per transaction, and recipients will have to register their debit card within 48 hours of receiving the payment to access their funds.

Google launched a similar P2P payments service through Gmail last week. It will be interesting to see if Google or Square (or both) will be successful in taking market share in P2P payments away from PayPal with these email-based P2P offerings.

Jonathan Camhi has been an associate editor with Bank Systems & Technology since 2012. He previously worked as a freelance journalist in New York City covering politics, health and immigration, and has a master's degree from the City University of New York's Graduate School ... View Full Bio